Neiman Marcus Files for Initial Public Offering

The IPO would clear the way for Neiman Marcus Inc.'s private-equity owners to begin unwinding an investment made before the financial crisis. Photographer: Richard Sheinwald/ Bloomberg

June 24 (Bloomberg) -- Neiman Marcus Inc., operator of the
luxury department-store chain, filed for an initial public
offering in the U.S. after also exploring a private sale.

The company used a $100 million placeholder amount, which
is used to calculate fees and is subject to change. Credit
Suisse Group AG is leading the sale of the Dallas-based
retailer, according to a regulatory filing today.

The IPO would clear the way for Neiman Marcus’s private-equity owners to begin unwinding an investment made before the
financial crisis. TPG Capital and Warburg Pincus LLC paid about
$5 billion in 2005 to take over the retailer at the beginning of
history’s largest buyout boom, data compiled by Bloomberg show.
The owners may seek to value the company at $8 billion in a
sale, people familiar with the plans said a month ago.

“It shows they are serious about a transaction, whichever
way it materializes,” Mortimer Singer, president of New York
retail consulting firm Marvin Traub Associates, said in a
telephone interview today. “An IPO has more variables -- the
price can go up or down and it is harder to get out of your
holdings immediately.”

Warburg and TPG plan to sell stock in the offering,
reducing their ownership, Neiman Marcus’s filing shows. The
filing doesn’t indicate whether the company plans to raise cash
from the offering. Those two firms, which led the 2005 buyout
group, invested $1.23 billion for an equity stake of more than
80 percent, according to a regulatory filing.

Investors’ Return

Shareholders of Neiman Marcus took $449.3 million in
dividends last year, according to a regulatory filing. If the
company were sold at an enterprise value of $8 billion, buyout
investors would see a partly realized gain of about threefold on
their money including that dividend, data compiled by Bloomberg
show. Neiman Marcus carried about $2.7 billion of long-term debt
as of April 27.

KKR & Co. weighed an investment in Saks Inc., the New York-based department-store operator, and considered seeking a merger
with Neiman Marcus as part of that plan, people familiar with
the process said in May.

Neiman Marcus and Saks, which had both hired advisers to
explore strategic options, could cut costs by closing stores if
combined, people familiar with the matter have said. Julia
Bentley, a spokeswoman for Saks, declined to comment. Ginger
Reeder, a spokeswoman for Neiman Marcus, declined to comment
beyond a press release today announcing the IPO filing.

Neiman Marcus operates stores under that brand and the
Bergdorf Goodman name. The company, led by Chief Executive
Officer Karen Katz, generated $4.5 billion in revenue in the
year ended April 27.

Luxury Spending

Revenue has failed to increase past pre-financial crisis
levels at Neiman Marcus, as so-called aspirational shoppers have
been slow to return to stores. Luxury spending in the Americas
grew 5 percent on a constant-currency basis in 2012, less than
half the 13 percent gain of the previous year, Bain & Co.
estimates.

At $8 billion including debt, Neiman Marcus would be valued
at almost 13 times adjusted earnings before interest, taxes,
depreciation and amortization of $623 million in the 12 months
through April, data compiled by Bloomberg show. The Ebitda is
adjusted to exclude management fees paid to the private-equity
firms that control it and other advisory fees.

The retailer didn’t disclose how many shares will be
offered or at what price.